Rise of Design Consultants
Should integrators worry or embrace the growing trend of homeowners hiring third-party design firms directly, then putting systems out for bid?
“Technology Architect” is a term that integrators may need to become familiar with as they start hearing it more. The label represents a growing breed of third-party design consultants who are being engaged by homeowners directly to design integrated residential systems, create a spec, then help put the systems out to bid for a chosen group of integrators to fight over.
In some cases, consultants are even selecting the integrator who is awarded the contract, and then staying involved as almost secondary project managers throughout the installation process on behalf of the homeowner. And for the most part, we’re talking about big-money, six-figure jobs.
The role of design consultants is somewhat controversial for several reasons. First, in essence, the design skills of dealers are being completely bypassed. Many dealers are turned off because they hear a giant sucking sound as they see design fees that they may have received going to another company. In general, these third-party design fees can be up to 15 percent of the total installation cost. On a $1 million job, that’s $150,000.
Second, some integrators are not wild about bidding against a spec at all, due to pricing issues as well as limitations in selecting products. Those are the main reasons many CE pros avoid the commercial market in general.
Third, most CE pros simply don’t like the idea having another company between themselves and the homeowner. In some cases, these third-party designers are the same companies that some dealers have used for many years (and continue to use) as valuable partners to help create their own system designs and write home control code.
So why are design consultants’ businesses thriving? One reason is that many consumers have become frustrated with the entire custom installation process where they receive confusing proposals from different integrators all using different equipment, which makes their decision-making difficult. That initial confusion breeds immediate distrust of their custom installation company - consumers wonder why certain pieces of equipment are spec’d versus others. Imaginations run wild of dealers receiving kickbacks or dusting off old product they have on their shelves for their job. Another reason might be that these specialist consultants are able to design better, more thorough systems, and thereby minimize change orders.
Consultants see their roles as very clear: they are acting as an advocate for the homeowner. They are designing the best solution possible, because 100 percent of their payment is the design fee. (Besides, many integrators don’t even charge for designs, but simply build the cost into their equipment margin.) Also, and importantly, integrators who bid on these jobs know they are 100 percent, no-questions-asked getting a highly qualified client since the homeowner has just shelled out significant money for the design. Finally, the installation itself is likely to go much smoother with many fewer change orders, because the design, construction documents, elevation drawings, etc., were not rushed together by the integrator himself.
So is this trend a sign that the residential market is heading further down the path of the low-bid, set-in-stone product specification that exists in the commercial world?
CE Pro spoke with several design-installation firms, who offered their take on why this is a growing trend.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at [email protected]
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